After writing on so many aspects, we decided it was time to capture the 7 most important retirement questions. Everyone has questions and preconceived notions on what retired life will be like.
While it’ll be unique and different for each of us, surprisingly, the majority of us are thinking and wondering about the same things.
What Is the Best Age to Retire?
The full age to retire is considered to be 65, however the average age turns out to be 61.
The Million Dollar Question: What Age to Retire reviews the many considerations when making this important decision. Mostly, it comes down to financial preparation and whether or not you enjoy your job.
Some folks want to travel or do other activities while they’re still young and healthy enough. In these instances, they’d likely prefer their partner alongside. Should Spouses Retire Together looks at the many benefits of entering this next phase of life together.
Despite our best laid plans, whatever can go wrong, often does. Over half of older workers are forced into retiring before they otherwise planned. This is due to circumstances beyond their control such as corporate downsizing, job loss due to an economic downturn, or health issues.
How Much Do You Need to Save?
Financial security is a big deal for just about everyone and probably the biggest concern of all the most important retirement questions. The simplest answer is you require enough to maintain a comfortable lifestyle.
One “rule of thumb” is your nest egg should be 25 times your current annual earnings. Thus, if you earned $60K a year, the recommendation works out to be $1.5 million.
Clearly, that’s not realistic for everyone. Lots of people are behind and simply can't catch up. In How Much Do You Have to Save, we did an in-depth analysis on the minimum a retired couple would need.
Our calculations revealed the average couple retiring at age 62 might get by with $430K. Supplementing this with their Social Security, they’d achieve an annual income of $48K until the age of 85.
Would that be enough?
The underlying concern is the fear of outliving your savings. What if medical issues arise which wipe out your savings? Investments do poorly or you overspend? All these doubts create anxiety over what the future might hold.
There’s no easy answer other than preparing as best as you can. This could lead to working another year or two, or even five. Of course, this becomes a trade-off as you’re missing out on what might be your best years.
Further to this, The Secret to Lasting Happiness When Retired reveals it’s not just about money. Instead, it’s about the people in your life and maintaining a positive outlook.
When Should You Take Social Security?
There’s an old saying, “a bird in the hand is worth two in the bush”. This appears true when it comes to Social Security as many enroll at their earliest age of eligibility.
Perhaps they’re fearful Social Security is at risk of financial meltdown as it’s reported to be underfunded and in jeopardy. Current projections suggest this is imminent as early as 2029.
Another reason for enrolling at age 62 might be to enjoy it while you can. In spite of the fact benefits increase by about 8% each year you defer, the early years are when you’ll be able to do all the things you want to do.
Health Care Costs
Future health care expenses might be the greatest unknown. Predicting the future is a crap shoot at best. Medical costs continue to skyrocket and as we age the likelihood of health issues increase.
According to the CDC, 78% of adults over the age of 55 have at least one chronic condition. The six chronic conditions include arthritis, asthma, cancer, cardiovascular disease, chronic obstructive pulmonary disease, and diabetes.
The day you leave work, your employee benefit plan generally expires. In spite of all the options, health insurance can be expensive. There are ways to reduce health care costs, yet until your 65th birthday, the premiums can be significant.
Once you become eligible for Medicare coverage, you’ll need to make decisions that could affect the rest of your life.
This process can be confusing. Our Guide to Medicare can assist with navigating through the multitude of choices.
What to Do After Retiring?
A lot of folks think they got it figured out, only to realize it isn’t quite like they expected. Replacing a 40-hour plus work week with something interesting isn’t always easy. If they haven’t really thought it through, they may find themselves feeling bored and restless.
My wife and I love to travel and some of our most memorable experiences were on cruise ships. There’s something about being on the water, a new port each day, the incredible dining, and entertainment. At least until they turned into floating petri dishes!
During our working years, we excitedly planned a new cruise each winter. After almost a dozen cruises, they no longer held quite the same appeal. We’ve seen just about every Caribbean port at least once or twice.
In addition, cruises aren’t inexpensive. Coupled with the fact they tend to nickel and dime you at every opportunity, we found ourselves looking for alternative travel plans.
This can happen to almost anyone. Something you found interesting and fun, after a while, loses appeal. The Ultimate Guide of Things to Do offers a different approach to finding meaningful activities.
Should You Downsize?
Somewhat related to the question where should you retire is should you downsize? You may no longer require such a large house and all the associated upkeep and expenses.
With increasing property values, this might be the opportunity to unlock all that equity. We’re wavering on this as we love our country lifestyle. Having said that, we also want to travel more, perhaps even wintering somewhere on a Greek island.
For us, a condo might be a wiser choice. In fact, close friends of ours did exactly that as we shared in Pros and Cons to Downsizing.
Where's the Best Place to Retire?
There’re so many options to consider. Should you:
The “right” answer depends upon where you and your spouse/partner want to be.
This last of the most important retirement questions might be one of the greatest sources of conflict if your significant other isn’t on the same page. He/she might want to be closer to the kids whereas you’re more into Floridian living next to a golf course. Where to Live When You Retire shares some perspectives of the dynamics of making this decision.
Another aspect to consider is things will change over the next 5, 10, and 20 years. That cabin in the woods may not be ideal, down the road, if health issues arise. Thus, the decision where to live may change over time.
Closing Thoughts on The Most Important Retirement Questions
Undoubtedly, all these concerns will go through just about everyone’s mind as they contemplate this next chapter in life. Some will dread it, whereas others gleefully look forward to crossing the finish line. No more dragging yourself into a soul sucking job!
If you’ve got a handle on these questions, these can be the best years of your life. Finally, doing what you want, when you want. Golden years here we come!!